Commercial transportation insurance rates are continuing to rise, which places the subject top of mind for fleet leaders managing a host of concerns in 2021. In its annual Top Industry Issues report, the American Transportation Research Institute (ATRI) listed insurance costs and availability as the fifth most pressing issue facing trucking—the first time appearing among the top five concerns since 2005. 

For trucking businesses, the costs associated with the transportation of goods, damage from accidents, and unwarranted lawsuits have all continued to climb. Correspondingly, insurance carriers have raised premium rates to account for the increased risk and claims losses. With nearly a decade of rising truck insurance premiums, it’s a trend that is expected to continue.

Understanding Fleet Risk

Risk is around every corner for fleets of multiton vehicles traversing roadways across the country daily. From costly maintenance and repairs to accidents, driver safety issues, and protection of goods, trucking companies must have robust risk management strategies in place for a host of consequential possibilities, especially depending on the cargo.

Each type of cargo brings its own unique risk exposures, e.g., a fuel tanker versus transport of nonflammable items. These different risks carry varying levels of associated costs, and one misstep that prevents a shipment from being completed or causes harm to the driver or others is detrimental to a business’s reputation and bottom line.

As in every business, there are actions and measures owners can take to manage the risks they can control, and there are risks outside of their control. The goal should always be to mitigate risk and improve safety outcomes, which is something insurance carriers will look for when analyzing a fleet’s profile. At renewal time, insurance carriers take all performance factors into account when determining policy coverage options and premium rates.

Savvy fleet managers will go beyond standard measures to improve their safety outcomes. This is where implementing research and technology can help.

Where Technology Helps

In the past, the trucking industry has been slow to adopt new technologies. However, with regulations like the electronic logging device (ELD) rule going into effect, businesses have been forced to change their practices, but the cost benefit still must be evident.

Tools that track and log maintenance records, improve driver safety, boost driver training, and allow for video capabilities on the roadway – to name a few – are helping to mitigate risks across fleets. The more data trucking companies can provide the insurance carriers to demonstrate actions they’ve taken to improve overall fleet safety and achieve lower claims, the more confidence the carriers can have in underwriting decisions and determining rates.

For example, distracted driving continues to present one of the most significant risks facing the commercial transportation industry both in dollars and loss of life. A report from SmartDrive estimated that distracted driving costs the U.S. as much as $175 billion a year. According to the 2019 Travelers Risk Index, 25% of businesses reported an employee getting into a distraction-related crash during the workday. Worse yet, eight people are killed in the U.S. each day due to crashes involving a distracted driver, according to the Centers for Disease Control and Prevention.  

As a result, trucking companies are investing in safety technologies such as driver- and road-facing video cameras. By using data and available technology as well as proven safety awareness programs to lessen distracted driving and other instances, decreases in claims losses can be achieved. These tools can provide evidence before and after an accident to inform fleet owners, insurance advisors, carriers, and legal counsel, when necessary.

However, adopting technology also requires putting it to good use. Businesses may have the ability to collect data, but the information must be analyzed to identify areas of improvement and actions must be taken. This is especially important when it comes to securing the best possible premium rates. When a fleet owner can demonstrate continuous improvement and vigilance, the carrier is much more likely to offer a better rate.

As technology continues to advance in nearly every industry, the value of its benefits is most evident in the transportation industry. Insurance carriers are not an adversary, but a key partner for trucking and logistics companies. However, they must have accurate information to properly assess the risk they are taking so they too can stay in business and are there when you need them. Data analytics and technologies help companies to improve their internal operations and lower their operating costs through negotiating lower rates. They simply become betters risks for the insurance carriers, and that’s a win-win for all parties.